What is the value of $750 invested at 7.5% compounded quarterly for 4.5 years (round to the nearest $1)?
A) $1,048
B) $1,010
C) $1,038
D) $808

Question

Quizplus · Accepted Answer

The formula for compound interest is $A = P(1 + \frac{r}{n})^{nt}$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount (the initial amount of money), $r$ is the annual interest rate (decimal), $n$ is the number of times that interest is compounded per year, and $t$ is the time the money is invested for in years. Plugging in the given values: $P = 750$, $r = 0.075$, $n = 4$ (since the interest is compounded quarterly), and $t = 4.5$, we get $A = 750(1 + \frac{0.075}{4})^{4*4.5}$. Calculating this gives a value close to $1,048, hence the correct answer is A.

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